Understanding Ethical Practices in Financial Services
Explore the importance of ethical behavior in the financial services sector, delving into key principles, examples, and the impact of scandals like Libor. Discover the distinctions between law and ethics, as well as the historical development of ethical thinking. Engage with learning objectives and reflect on personal definitions of ethics.
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Presentation Transcript
Fundamentals of Financial Services Development of Ethical Thinking & Ethical Practice Ethics & Integrity in Financial Services
Ethics & Integrity in Financial Services Everyone MUST Be able to list and explain the key principles of ethical behaviour in financial services Ethics in Practice Ethics in Financial Services The Development of Ethical Thinking Most SHOULD Be able to explain the key principles with the use of an example Stretch & Challenge Question: What has been the key consequence of the Libor scandal upon the way ethics is viewed in the financial services sector?
Learning Objectives Everyone MUST Be able to list and explain the key principles of ethical behaviour in financial services Be able to list and explain the key principles of ethical behaviour in financial services Everyone MUST Most SHOULD Be able to explain the key principles with the use of an example Most SHOULD Be able to explain the key principles of ethical behaviour with the use of an example Stretch & Challenge Question: What has been the key consequence of the Libor scandal upon the way ethics is viewed in the financial services sector?
What is Ethics? On your post-it note jot down what the term ethics means to you and bring it up to the board: ETHICS
Law vs. Ethics Are Law and Ethics the same thing?
Law vs. Ethics LAW Law is about what is lawful and what is unlawful ETHICS Ethics are about what is right and what is wrong An ethical decision is one that is both legal and meets the shared ethical standards of the community
Development of Ethical Thinking Early ideas were contributed by the Greek Philosophers The key contributor being Aristotle, who introduced virtue ethics . This philosophy requires that individuals actively do good, rather than just being a good person within themselves. He has also been linked to the idea of natural law which suggests that there exists an innate law, or coded behaviour, with which everyone is born.
Ethics in Practice Doing the right thing You make the choice about the actions that you take Why do you think these individuals/companies behaved unethically despite knowing the potential negative implications of their behaviour? Why do some companies continue to behave unethically?
Which professions Which professions would you would you generally trust to generally trust to tell the truth? tell the truth? *
Who do you trust? * * Discuss with your partner who do you trust?
Survey 2015: The 5 most trusted professions * Source: Ipsos MORI Political Monitor, Jan 2015
Survey 2015: Trust in Industry * Source: Ipsos MORI Political Monitor, Jan 2015
Edelman Trust Barometer 2016 The survey is Edelman s 16th annual trust and credibility survey. It measures trust across a number of institutions, sectors and geographies. The 2016 Edelman Trust Barometer surveyed more than 33,000 respondents across 28 countries. The Edelman Trust Barometer 2016 has revealed A Tale of Two Britains. A yawning gap has opened between Britain s haves and have-nots in Edelman s annual survey of how much trust we place in the institutions that dominate our lives. The trust that Britons feel in government, business, the media and NGOs depends on where they stand in the social hierarchy. Source: Edelman Trust Barometer 2016
Edelman Trust Barometer 2016 Highlights Some of the key findings in the UK reveal: Little trust in politicians, but business stages a trust revival Brexit strongly favoured by those struggling through austerity; the wealthy want to stay in the EU Trust in business reaches a post-crisis high but only among the well-off The biggest trust gap of all institutions is in relation to business Paying tax and behaving responsibly remain the major divers of increased trust in business Source: Edelman Trust Barometer 2016
Financial services is the least trusted industry globally Financial services ranked last in the 25-country survey of the general population with a 51% trust rating. The good news is that public trust in financial services has increased 8% since the 2012 survey * Source: CFA Institute
Increased Trust in Financial Services 2016 Source: Edelman Trust in Financial Services 2016
4 Key Principles of Ethical Behaviour Is what I am about to do, or are the actions that I am about to take: Open Honest Transparent Fair
SUMMARY How important is ethics: o In your personal life? o In your professional life? What are the 4 key principles of ethics that will help you assess whether a decision is ethical or not?
